Corporate Governance

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student
Name of the University
Author’s Note

1CORPORATE GOVERNANCE
Table of Contents
Requirement 1..............................................................................................................2
Requirement 2..............................................................................................................2
Requirement 3..............................................................................................................3
Requirement 4..............................................................................................................4
Requirement 5..............................................................................................................5
Requirement 6..............................................................................................................6
References...................................................................................................................7

2CORPORATE GOVERNANCE
Requirement 1
Corporate Governance can be considered as the framework that includes
certain rule and practices used by the boards of directors to ensure fairness,
accountability and transparency in the businesses for maintaining strong relationship
with their key stakeholders such as investors, employees, customers, management,
government, community and others. The framework of corporate governance
includes obvious and inherent contracts between stakeholders and firms for the even
distribution of responsibilities as well as rights, processes. This helps in solving the
conflicting interest of the stakeholders and processes to appropriately supervise and
control the information flow within the organizations (Tricker, 2015).
Requirement 2
There is a strong link between corporate governance and financial markets. It
needs to be mentioned that corporate governance has a link with the liquidity as well
as the clients of the companies who hold the stock. High liquidity can contribute
towards the decrease in corporate governance of the companies as it contributes
towards the decline in stability of the clients of those companies since it is cheap for
them to sale a stock if it is liquid (Claessens & Yurtoglu, 2013). At the same time,
liquidity also has the capability to attract sophisticated stock agents which leads to
the overall improvement in the corporate governance of the companies. One
important aspects is that the institutional ownership plays a crucial role in promoting
corporate governance within the financial markets. The proportion of orders
performed by the small traders has association with fragile corporate governance
which indicates that the surplus of small traders can deteriorate the disciplines
applied by the outside market on corporate governance. Lastly, the variation in